NAHCO FTZ  Working against Free Trade Zone’s Vision

Minister of State, Aviation, Senator Hadi Sirika

With increase in the threat of global and domestic terrorism, proliferation of arms, money laundering, drug trafficking human trafficking amongst other acts of economic sabotage and potential threats to national security, the Murtala Muhammed International Airport, Ikeja Lagos, and the Nigerian Free Trade Zone industry have come under scrutiny. There is a revelation of violations of Nigeria’s extant laws and regulations at the MMIA ranging from, but not limited to illegal Free Trade Zone operations, smuggling activities, illegal access from airside to landside and vice-versa through gates in the airport that are concealed from relevant government agencies. Adedayo Adejobi reports

With a daily passenger and cargo throughput of over 50 flights, Murtala Muhammed International Airport, Ikeja Lagos (MMIA) is no doubt the major airport serving as a major hub of country and also the West African sub-region. A compromised security and safety architecture portends danger to the entire nation.

NAHCO Free Trade Zone (NFTZ)  which is located in the Cargo terminal of the MMIA is a subsidiary of the Nigerian Aviation Handling Company (NAHCO) Plc, a major aviation ground handling Company. Outwardly, the premises bear no semblance of much activity, but behind the façade and also at night, varying degrees of unwholesome activities take place.

THISDAY investigation, reports and documents obtained from sources within the Presidency have  indicated that  NFTZ, a subsidiary of the Nigerian Aviation Handling Company (NAHCO) Plc, is in breach of the Nigeria Export Processing Zone Authority (NEPZA), Nigerian Customs, Immigration, Nigeria Drug Law and Enforcement Agency, Nigeria Civil Aviation Authority, and Aviation Security regulations and corporate governance structure, which compromise national security and are threats to the nation’s economy.

THISDAY checks revealed that in a petition written to the President and Commander-in-Chief of the Federal Republic of Nigeria in July 2019, Mr. Baba Yusuf, the erstwhile managing director/ chief executive officer of NAHCO Free Trade Zone NFTZ, had alleged that during his tenure, he discovered some gross violations of various extant government laws and corporate governance stipulations, which compromise national security and promote economic sabotage. These violations include illegally operating non-free trade zone businesses in a free trade zone, smuggling activities, cargo diversion to avoid payment of Customs Duties resulting in the protracted unutilised airway bills issues leading to the loss of billions of naira that should accrue to government as revenue; illegal access and crossings from airside to landside and vice-versa through gates in the airport that are concealed from relevant government agencies, etc. Yusuf has also copied the Secretary to the Government of the Federation, relevant ministries and various agencies and arms of government including committees of the National Assembly and the Economic and Financial Crimes Commission(EFCC).

The petition read in part , “This petition, therefore is to bring to the notice of the relevant agencies of government the germane facts of what is going on behind the façade of NAHCO so that the necessary actions can be taken to enforce the rule of law and bring sanity, mitigate the evident risks and ensure full compliance with regulations that will protect our national borders, stop economic sabotage and secure a key national gateway; the Murtala Muhammed International Airport from potential acts of terrorism and other threats to national security.”

According to him, “I took some initial steps to curtail/ stop the nefarious activities, which triggered some tacit internal resistance and threat to my life.”

The concluding part of the petition read: “The impact of the various violations of the NEPZA Act and NEPZA regulations on our national economy, safety and security are also clear. The dangers of allowing such illegalities of fostering national economic sabotage, financial crimes and compromising national security as evidenced in this petition should be immediately estopped by NEPZA, NCS, NCAA, AVSEC, FAAN and indeed all the relevant agencies of government to mitigate and avoid the eminent risks and dangers. Taking time to investigate the issues raised and taking the necessary actions will also strengthen our laws and send clear signals to operators in various regulated environments that there is zero tolerance for refusal to follow laws and regulations.”

THISDAY investigations and information gathered from some sources in some ministries and agencies of government that were copied in the petition, show that NEPZA knew about most of these infractions for over five years and yet as regulators did not do anything to stop the violations.

There are also indications that some agencies of government are trying as much as they can to cover-up the issues in order to avoid sanctions, and to allow NAHCO to continue the unwholesome activities albeit in different ways.


Some Instances of Economic Sabotage

The entire cargo operations area of NAHCO has been declared a free trade zone since 2014 – NAHCO is illegally operating non-free trade zone activities within the designated free trade zone approved by the Presidency

THISDAY confirmed that for the past five years, the NAHCO export, import, bulk breaking area and the NAHCO office complex measuring over two hectares have been declared a Free Trade Zone by the then President Goodluck Jonathan. But Investigations showed that NAHCO Free Trade Zone had been operating only within the 5,730sqm trans-shipment warehouses that were approved as an extension of the original free trade zone. NFTZ never operated in the original land designated as Free Trade Zone, but rather NAHCO Plc is illegally conducting its core non-free trade zone cargo operations in the FTZ in flagrant violation of the NEPZA Act,1992, NEPZA regulations of 2004 and Nigeria Customs Service regulations on Fee Trade Zones.

Even though the entire cargo warehouses of NAHCO are Nigeria Customs Bonded Warehouses, From THISDAY findings, it appears that for the past five years, the Nigeria Customs Services, the Federal Airports Authority of Nigeria (FAAN) and the Nigeria Civil Aviation Authority (NCAA) and other relevant government agencies were not aware that the aforementioned NAHCO operations area had been declared a free trade zone and therefore all the activities happening the area have been going on illegally without the knowledge of the Nigeria Customs. NAHCO and NEPZA have concealed this fact from the Nigeria Customs and all other relevant government agencies. Aviation and economic analysts have said this was tantamount to economic sabotage.

Therefore, NEPZA, as regulator and administrator of the NFTZ should not have allowed NFTZ to be operating customs territory operations in the areas declared free zone by the then president.  One cannot understand why or how the regulator allows such a breach to start and continue unabated.

THISDAY gathered from the petition that during the approval process of approval of the Free Trade Zone, the Chief Economic Adviser (CEA) to former President Goodluck Jonathan, Professor Nwanze Okidegbe, raised concerns and set conditions precedent to the approval for NFTZ as part of his recommendations to the then President. The Principal Secretary to the former President, Mr. Hassan Tukur also re-echoed those concerns of the CEA in his memo to the president. Those conditions, THISDAY gathered, were not met before the FTZ licence was granted to NAHCO, presumably with the understanding that the conditions would be satisfied during or after setup of the Free Trade Zone, which has resulted in the current worrisome situation at NAHCO Free Trade Zone.

Some of the conditions precedent include: the need for a more rigorous Environmental Impact Assessment (EIA) by NFTZ to evaluate the full and negative, real and potential impact of setting up NFTZ at the aforementioned location; the need to adequately address security issues as part of due diligence for the feasibility of NFTZ given the high sensitivity of the NFTZ location.

Others include: that additional measures must be developed and entrenched to ensure that the proposed NFTZ will not be abused or misused and that stringent measures were to be developed and a commitment signed by the NFTZ leadership that NFTZ will not be used as avenue for capital flight and money laundering, or engage in activities that compromise national security; the need for a more rigorous projection of the economic benefits that will accrue to show viability and sustainability of the NFTZ compared to the projections earlier presented by NAHCO, and  a more detailed masterplan was also required to show specifics in terms of the area, infrastructure and operational design to demonstrate the capacity of NAHCO to be given the FTZ status.

In the petition, Yusuf, who claimed he was the chief executive for only seven months (July 2018 to February 2019), “Indeed, the conditions precedent to the approval of the NFTZ, which raised salient issues of security, safety, accountability, government economic and financial impacts, etc. have manifested as going concerns and threats, which have now put the integrity and relevance of the NFTZ and operations to question.”

NFTZ and NAHCO have breached the NEPZA Act and NEPZA Regulations as well NCS, FAAN and NCAA regulations. Section 1(3) of the NEPZA Act No. 63 of 1992. Experts note that the consequence of this violation is the revocation of the operating license.

Many analysts believe allowing such gross violations of safety and security regulations could also negatively impact the ICAO certification of the MMIA, which we all were applauding some weeks ago to the credit of President Muhammadu Buhari and his team.

Other major issues raised in the petition include some video clips, which has surfaced and made available to THISDAY, evidencing that contraband and other smuggling activities took place at the NFTZ location. Smuggling is clearly an act of economic sabotage.

NEPZA’s weakness as administrators of free trade zones in Nigeria, in ensuring full compliance and supervision even in cases where they are aware of the violations speaks volume on the need to examine carefully NEPZA’s effectiveness and efficiency as a regulator of free trade zones.

Records also show that NFTZ collected money from a free trade zone enterprise, supposedly “fees due to NEPZA”, it rather kept the money as revenue. When the enterprise raised objection to the payment which led to NEPZA writing to NAHCO to immediately remit the money collected, using the name of government, into the federal government TSA account. Almost one year after that instruction from NEPZA, NAHCO is yet to comply with directive.

On further investigation, THISDAY gathered that for the past five years, NFTZ has been collecting rent fees from another enterprise within the free zone without any form of payment to the federal government. This is a contravention of Section 13(1) & (2) under the NEPZA Act. 63 of 1992. The sanction for this violation, experts says, is revocation of licence. The enterprise is not operating as a free zone entity, and it is not paying any form of statutory fees to government for operating in the free zone over the years, neither has NFTZ been paying any income or fees to NEPZA from the rent income collected and/or based on the particular enterprise operations. This is a clear violation of extant rules and also act of economic sabotage. NEPZA was aware of the infraction for more than four years.  With these and more, there is no better narrative that explains succinctly that the refusal to pay statutory government fees is economic sabotage.

Documents show that  FAAN and NCAA, as the operators and regulators of the Murtala Mohammed International Airport were not carried along during the consideration and approval of the Free Trade Zone status. Despite three different letters from NEPZA to NAHCO asking for a “letter of consent from FAAN, being the bonafide owner of the land, categorically stating they have no objection and/ or conveying their support for the application for the Free Zone status on the leased premises”,  the letter of no objection was not granted by FAAN. FAAN and NCAA were not even aware that a process of Free Zone was ongoing in the airport they operate as lessors, whereby the lessee could even possibly use the lease documents as leverage to secure funding or investments. The issues raised in the petition are indeed very worrisome, more so they were backed with evidences.

But  in his reaction to inquiry on the petition,  Lagos Zonal Office Director, NEPZA, Mr. Garba Hayatu, told THISDAY ‘’ I am aware of some petitions .May be the petition as written and the headquarters was copied. I am in the zonal office.”

He argued: “I don’t think the petition has basis but since he has petitioned, they should go ahead and do whatever is necessary. I think the authority is handling it. THISDAY should investigate and do what is needful. It may also go the authority headquarters to discuss with them.’’

Compromised and Threatened National Security

THISDAY authoritatively gathered that there were two back-door accesses at the NFTZ trans-shipment warehouses through which movement of people and goods take place from airside to landside, coming out through the front entrance of NFTZ. The same route is used for the movement of people and goods through the warehouses and directly to the airside, where the cargo aircrafts are parked.  This is basically an illegal border creation and crossing, which has been going on for the past five years, without requisite approval and provisions.

The same illegal accesses can be used to access the Presidential Wing, International terminal and local terminals of the MMIA with potential grave security and safety risks and concerns.

The operators and regulators of the airport security and operations namely NCAA, AVSEC, FAAN, Nigeria Immigration Services, NDLEA, etc. were not aware of the existence and usage of these illegal access doors. Indeed, no permission was given by NCAA and/ or FAAN for the access doors to be left open. If approval was given, then FAAN AVSEC would have been manning the gate.  Granting approval would have been impossible given the location of these exit points.

The consequences of the aforementioned illegal back doors  are that, the geographical location of NFTZ’s core operations currently on the airside and the aforementioned violations have disqualified the status of FTZ operations at that location due to strategic, operations, security and safety reasons.

Too many loopholes in the NFTZ operations make it possible and easy to smuggle contrabands such as money, drugs like cocaine and tramadol, arms and ammunitions, diversion of cargo to avoid payment of Duties etc.

With these discoveries and more, the precarious situation could dent the MMIA’s compliance with ICAO’s  (International Civil Aviation Organization) Annex 17 to the Convention on International Civil Aviation “Security: Safeguarding International Civil Aviation against Acts of Unlawful Interference” to which Nigeria is a signatory.

Yusuf referred specifically to sections 3.5 “Air Traffic Service Providers” of Chapter 3; Chapter 4: “Preventive Security measures”; 4.2.1- 4.2.9; 4.6.1- 4.6.11; 4.8.1- 4.8.3, it is clear and instructive to note that there are clear violations of the Nigeria Civil Aviation Authority Regulations (CAR).

Violation of Human Resource Provisions of NEPZA Act and NEPZA Regulations

Speaking on violations of human resource provisions of NEPZA Act and regulations, Yusuf said: ‘‘Since inception five years ago, NFTZ is not in compliance with Part 8 of the operational guidelines of the NEPZA Act No 63 of 1992 (Regulation on Employment of Human Resources, Insurance and Social Security). The NEPZA monitoring team had repeatedly over the years asked the NFTZ to comply with FTZ HR regulations but NFTZ refused to comply. By refusing to review the HR structure and management system five years after starting operations NFTZ has deliberately violated NEPZA regulations.”


When THISDAY contacted Yusuf,  the former NFTZ MD/ CEO, comments, he confirmed that he wrote the petition. He, however, declined to comment on the issue out of respect for the President Buhari and other institutions of Government, especially given that the matter could be under investigation. He said he would rather allow the federal government to take decisions.

However, when confronted with the allegations levied against NAHCO FTZ, the spokesman of the agency, Tayo Ajakaiye,  feigned ignorance about the petition and asked to be presented with a copy. “ I am not in copy of the document. You may wish to provide me with a copy. I would be grateful,” he said.

But he added: “You said the allegations border on some malpractices; which malpractices? When you give me the specific allegation, I would be able to give a specific response. Since you said you stumbled on the petition, you may wish to tell me who it was addressed to; which date it carried, and/or when it was received by the investigating authority. I think that is just normal journalistic protocol. More important to me, however, is that let me know what the specific allegation is. Then I can respond.”

Risks of Allowing Violations and Breaches of Laws and Regulations

With such violations and compromises of airport security, MMIA security architecture, imaginations are safe to run wild on the possibilities.

An example is that of the terrorist attack of the Russian passenger plane Metrojet flight 9268, 23 minutes into its journey from Sharm el-Sheikh in Egypt to St. Petersburg in Russia on 31st October 2015. ISIL claimed responsibility for the terrorist attack. On 17th November, 2015, the Russian Federal Security Service announced that they were sure that it was a terrorist attack, caused by an improvised bomb containing the equivalent of 1kg of TNT that detonated during the flight. On 24th January, 2016, Reuters reported, from an unnamed source, that a mechanic was suspected of planting a bomb, which he had been given by his cousin, who was a member of ISIL. Two policemen and a baggage handler were suspected of helping the mechanic. This is just one example amongst other instances of the devastating consequences of airports that allowed breaches in security and safety protocols to go unchecked.

To further contemplate the likely risks and impact of the consequence of allowing such violations to continue unchecked is to look at it from the magnitude of passenger and cargo throughput of the MMIA. According to the Nigerian Bureau of Statistics (NBS), in 2018, 3,045,383 passenger throughput (arrival and departure) was recorded at MMIA, while over 129,091,516.40kg reflecting 78 per cent of the total of 164,938,399.43 kg national cargo throughput (import and export) was recorded for 2018. With this volume of economic activities and with the worrisome revelation of compromise of the national economy (especially the non-oil sector), safety of the airport and importantly national security, it is scary that over four months after the petitioner has raised the alarms, no indication of any serious actions that have been taken based on outcome of investigations by relevant government agencies.

It is worthy to note that around July 2016, the Economic and Financial Crimes Commission (EFCC) investigated NAHCO Plc on issues bordering on alleged breach of corporate governance, financial crimes and board room power tussle, which led to the resignation of the Chairman of NAHCO Plc, Mallam Suleiman Yahyah, and subsequent restructuring of the board of directors. With the current revelations, it appears that NAHCO is still enmeshed in issues that require serious attention.

A Call to Action

Grave infractions of this enormity, carried out by a corporate entity such as NAHCO, is not without sanctions under our relevant laws. And since NAHCO, being an inanimate being, obviously the alter ego of those behind the company by the elementary knowledge of company law that is lifting the veil, will definitely be held accountable as well. It behoves on the federal government take this matter of economic sabotage and national security threat seriously. It must immediately launch a robust and independent investigation with a view to confirming the facts and taking the necessary actions to bring perpetrators to book and to safeguard our economy and national security.